When you receive a letter from the IRS stating that you’ve been selected for a tax audit, it’s normal to be worried even if you’ve always filed your returns on time and you’re reasonably sure that they are accurate. There’s just something about an IRS notification that makes you feel as if you’re guilty until proven innocent.
Your first question after reading the letter will probably be “Why me?” followed by “How do I prepare?” In this blog, we offer three tips to help you prepare for an IRS audit, so that you can make the best out of the situation.
How Does the IRS Carry Out Audits?
The IRS carries out random audits of an individual’s or organization’s tax records and financial information to confirm that they are reporting and paying the right amount of tax for their income bracket. Audits are carried out in one of three ways:
- By Correspondence: The IRS often handles routine errors due to missing paperwork or incorrect calculations through correspondence.
- In-Office Examination: Office examinations are held at local IRS offices. With these audits, the goal is to confirm that you reported all income and that any deductions are legitimate.
- Field Audit: This audit is the most extensive. An IRS agent visits your home, business, or CPA’s office to examine records and confirm that everything reported on your return is accurate.
Regardless of what method the IRS chooses to examine your financial records, there are steps you can take to make the process go as smoothly as possible.
1. Collect Appropriate Records and Documentation
If you’re notified of an audit, collect all financial and transactional records and documentation related to the year in question. This includes but is not limited to:
- Invoices and receipts
- Canceled checks
- Bank and credit card statements
- Loan agreements
If you’re being audited by correspondence, send copies of all requested documentation to the address listed in the IRS notice. For in-office or field audits, have these documents ready for your meeting with the IRS representative.
2. Notify Your Tax Professional
If you have a CPA who prepares your tax returns each year, contact them before you respond to the IRS notice. Even a simple document request can escalate into an in-depth examination of your financial records if you aren’t careful. If the IRS intends to do an office or field audit, your tax professional can provide any necessary assistance and even be present at the meetings.
3. Seek Assistance from a Tax Attorney
When the IRS audits you, a past mistake arising from genuine error or poor judgment can create potentially serious problems for you. To make matters worse, the government has access to substantial resources that can put you at an unfair disadvantage. An experienced tax attorney knows the law and will use their insights to protect your interests, advocate for the best outcome, and help you file an appeal if you disagree with the audit findings.
Contact a Seattle Tax Attorney
If you have received an audit notice from the IRS, contact Boeshaar Law or call (206) 899-4860. We have represented many clients and provided experienced and knowledgeable support during IRS audits, IRS appeals, and in litigation before the U.S. Tax Court. We work closely with you to evaluate the facts of your case and put together a course of action that helps you achieve the best outcome for your situation.
Robert V. Boeshaar Attorney at Law, LL.M.,PLLC
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